Missouri investments tied to Sudan

The ties are to foreign companies that operate in Sudan.
Wednesday, August 10, 2005 | 12:00 a.m. CDT; updated 12:37 a.m. CDT, Friday, July 18, 2008

Missouri pension funds have more than $900 million and the University of Missouri System has more than $54 million directly invested in foreign companies that have equity ties with the war-torn nation of Sudan.

Other states and some universities throughout the United States have begun a campaign to end investments like these that could inadvertently be supporting actions in Sudan that former Secretary of State Colin Powell has called genocide.

It is already illegal for U.S. companies to do business with or invest directly in the east African nation; however, many foreign companies operate there and receive investments from the United States.

Joe Moore, UM director of media relations, said there is no UM policy restricting investments in companies doing business in Sudan, and no policy is under review.

Investments in these eight companies account for 1.78 percent of the UM System’s

$3 billion in investments. Moore emphasized that the companies are part of portfolios in which the system invests.

Information about the state’s investments were compiled by Conflict Securities Advisory Group in Washington, D.C.

Sudan has been entrenched in civil war for 50 years. There are many layers of conflict, but the most recent conflicts have occurred in Sudan’s western region, Darfur, between the Arab militia called Janjawe and non-Arab civilians. The United Nations has reported cases of ethnic cleansing and genocide in this region.

While divesting from Sudan has received little attention in Missouri, at a July 21 board meeting for the Missouri State Employees’ Retirement System, state Sen. Todd Smith, R-Sedalia, presented a plan to screen the pension fund’s investments for possible ties to terrorist activities.

“Sudan is the country du jour because of the genocide occurring there,” Smith said at the start of the meeting, but most of the debate centered on an $80,000 investment in Arab Bank by MOSERS. MOSERS is responsible for managing nearly $6 billion of investments used for retirement, life insurance and long-term disability.

That meeting produced a procedure to screen MOSERS’ investments for possible ties with five countries blacklisted by the U.S. government: Iran, Libya, North Korea, Sudan and Syria.

No standard for when the board should divest from a company was created.

“Sometimes I think divesting from a company can have negative effects on a country,” Smith said, adding that for a lot of these countries, economic stability is a key step to improvement.

Smith said that the MOSERS board would like to look to the national government for standards or a list of high-risk companies but that he has received no help or response.

Smith also said that although he hasn’t considered introducing a bill that calls for divestment from Sudan, he is certain somebody else will look into it.

UM System President Elson Floyd was not available for comment, Moore said. Thomas Atkins, the president of the UM Board of Curators who typically speaks for the board, was not available for comment either.

Information about UM System investments was compiled by its Office of the Treasurer based on a list of foreign companies provided by the Missourian. Companies on the list were identified by New Jersey Assemblyman William Payne’s staff, the Genocide Intervention Fund and, in some cases, the companies themselves.

Illinois was the first state to pass legislation requiring the state treasurer to divest from financial institutions doing business in Sudan.

“I think we have a moral obligation to raise our voices against such atrocities,” said Illinois state Sen. Jacqueline Collins. She introduced the ground-breaking divestment legislation that became law in June and takes effect in January.

Louisiana and New Jersey have also enacted divestiture laws, and bills have been introduced in 10 other states: Arizona, California, Indiana, Maryland, Massachusetts, New York, North Carolina, Ohio, Texas and Vermont.

A spokesman for Payne, the New Jersey assemblyman, said the divestment strategy there mandates that 60 days after the bill was approved, July 27, the investments the state holds in companies with equity ties with the nation of Sudan must be reported. In subsequent years, the treasurer’s office must report how it has acted to divest from these companies.

The bill cites human rights violations as justification for divestment, including more than two million deaths, and the displacement of four million people since 1983.

In April, after receiving pressure from students, Harvard divested about $4.4 million from PetroChina, a company involved in the oil industry in Sudan. The University of Stanford and Dartmouth College have voiced their intentions to divest from Sudan as well.

The UM System does not have any investments in PetroChina; however, Royal Dutch Petrol (Shell) owns and operates 45 gas stations and two depots in Sudan. Between the retirement fund and the endowment fund, the UM System has more than $14 million invested in this company. A Shell spokesman said that the company does not purchase crude oil from Sudan and it no longer owns a refinery there, but it does have 130 employees.

According to the Conflict Securities Advisory Group, MOSERS has more than $150 million invested in 48 companies operating in Sudan.

Other state investors with ties to Sudan include: Kansas City Police Employees’ Retirement, St. Louis Police Retirement System and the Missouri Public Schools Retirement System.

Many people have made comparisons between the beginnings of this divestment effort and the movements states and universities underwent in the 1980s to divest from South Africa in protest of apartheid there.

“It is possible for private entities to apply economic punishments,” said MU political science professor Herbert Tillema.

The divestment efforts in South Africa were not particularly powerful, Tillema said, but he pointed to other factors that brought about the fall of apartheid.

“There may be other reasons to divest, such as to take a stand against genocide,” he said.

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